There’s a big shift on the horizon for self-employed business owners and landlords across the UK - one that’s going to impact how you report your income to HMRC every single year. It’s called MTD for Self-Assessment, and while it’s not here just yet, it’s coming soon enough that smart business owners should be preparing now.

If the term “Making Tax Digital” has left you scratching your head or panicking about spreadsheets and deadlines, you’re not alone. But this blog is here to help. We'll explain what MTD for self-assessment is, who it affects, when it starts, and - most importantly - what steps you should be taking to avoid scrambling last minute.

Let’s make this as painless and practical as possible for you!

1. What Is MTD for Self-Assessment?

Let’s start with the basics. MTD for Self-Assessment (officially called Making Tax Digital for Income Tax Self-Assessment, or MTD for ITSA) is HMRC’s plan to make the self-assessment process fully digital. This means no more saving everything for January, no more paper records, and no more annual tax returns in the format you’re used to.

Instead, if you're self-employed or a landlord earning over a certain threshold, you’ll need to:

• Keep digital records of your income and expenses
  

• Use MTD-compatible software to log those records
  

• Send HMRC updates every quarter (instead of one annual return)
  

• Submit a final year-end declaration to tie it all together

The goal? Better accuracy, fewer errors, and (eventually) a clearer picture of your tax in real-time.

This is a major shift in how small businesses and individuals interact with HMRC - so knowing what’s coming and getting ahead of it will put you at a serious advantage.

2. Who Does MTD for Self-Assessment Apply To?

Not everyone will be affected - at least not right away. Here's the current scope:

✅ If you’re self-employed (sole trader) or a UK landlord, and your combined income from those sources is over £50,000 per year, you’ll need to join MTD for self-assessment from 6 April 2026.

✅ If your income is between £30,000 and £50,000, you’ll follow from April 2027.

❌ If you earn under £30,000, there’s no firm date yet - HMRC has said they’ll review the rollout for this group in the future.

Also worth noting:

• This applies per individual, not per business. So if you have two businesses or a mix of property and self-employment, your combined income is what counts.
  

• Partnerships and companies aren’t included in MTD for self-assessment yet - but they will be in the future.

So if you’re a sole trader hairdresser making £55k, or a landlord earning £35k from property and £20k from a side hustle - you’re in.

3. What Will You Actually Need to Do Differently?

Let’s break down the new process under MTD for self-assessment, compared to what you might be used to.

Current System:

• Keep records (possibly on spreadsheets or paper)
  

• Submit one annual Self Assessment tax return by 31 January
  

• Pay any tax due by the same deadline

Under MTD for Self-Assessment:

• Keep digital records using compatible accounting software
  

• Submit quarterly updates to HMRC (every 3 months)
  

• Submit a final end-of-year statement to confirm all figures and make adjustments
  

• Still pay your tax by 31 January as usual

Here’s how the reporting will look:

Period

Quarterly Deadline

6 April – 5 July

5 August

6 July – 5 October

5 November

6 October – 5 January

5 February

6 January – 5 April

5 May

This means five submissions per year - four quarterly and one final declaration.

Important: If you're using spreadsheets right now, you’ll need to either switch to compatible software (like QuickBooks, Xero, FreeAgent) or use a bridging tool that connects your spreadsheet to HMRC's system.

4. How to Prepare for MTD for Self-Assessment (Now)

You don’t need to wait until 2026 to get your ducks in a row. In fact, preparing early will save you a whole lot of stress - and possibly even help you run your business better in the meantime.

Here’s what you can start doing today:

✅ Step 1: Know Your Threshold

First, confirm your total income from self-employment and/or UK property. If it’s over £50k, you’re in the first rollout group.

If you're under £30k, you’re safe for now - but it’s still smart to adopt digital tools early.

✅ Step 2: Move to MTD-Ready Software

Ditch the spreadsheets and choose a platform like:

• Xero
  

• QuickBooks
  

• FreeAgent
  

• Sage Business Cloud

These tools don’t just help with MTD - they’ll streamline your invoicing, expense tracking, and cash flow visibility.

Some even offer mobile apps so you can snap receipts and log expenses on the go.

Pro tip: If you’re working with a bookkeeper or accountant, ask them what they recommend or already use.

✅ Step 3: Get Into the Habit of Quarterly Reporting

Even if you’re not submitting quarterly updates yet, start pretending you are.

Log your income and expenses monthly (or even weekly), and run quarterly reports. This will help you:

• Spot issues early
  

• Avoid surprise tax bills
  

• Understand seasonal ups and downs
  

• Get comfortable with the MTD rhythm

✅ Step 4: Talk to Your Accountant

Ask them:

• How MTD for self-assessment will change your tax return process
  

• What software or systems they recommend
  

• Whether they’ll handle quarterly submissions for you or show you how to do it

Many accountants are already preparing clients for this change - and those conversations can be invaluable.

5. Common Questions About MTD for Self-Assessment

Let’s answer a few FAQs that small business owners keep asking:

❓ Can I still use spreadsheets?

Technically, yes - but only if they’re connected to HMRC using bridging software. This adds complexity and may not be future-proof, so full software is usually better.

❓ What if I miss a quarterly deadline?

Late submissions could lead to penalties - though HMRC is expected to offer a “soft landing” period in the early stages. Still, better to build good habits now.

❓ Will this increase my tax bill?

Not directly. You’ll still pay once a year. But reporting more regularly means fewer surprises - and less temptation to fudge or forget transactions.

❓ Is this just more admin?

It might feel like it at first, but it’s really about improving accuracy and cash flow management. Plus, with the right software, it can all become pretty seamless.

Yes, MTD for self-assessment adds a new structure to the way you report tax. But this doesn’t have to be a negative thing.

Think of it as an opportunity to:

• Get better visibility over your finances
  

• Ditch the January tax scramble
  

• Make smarter decisions with real-time data
  

• Automate time-wasting tasks you’ve probably been doing manually for years

The key is to start now - not when HMRC starts knocking.

✅ Set up your software
✅ Build new habits
✅ Speak to your accountant
✅ Learn the new rhythm of quarterly submissions

The businesses that prepare early won’t just avoid penalties - they’ll be more organised, less stressed, and in a much stronger position for growth.